Langeled and Drax

29 March 2007

Large marginal plant can be an advantage but it can also effect markets quite significantly.

In the 1990's the pool system of pricing relied heavily on the marginal unit. This unit set the pool price for all the other generators for that half hour. Complex algorithms were devised for calculating which unit was the marginal unit and then a large computer would run "Goal" the NGC programme for assessing marginal plant. More often that not, Drax would be the marginal setting plant, with 6 630MW units and with NGC looking for 2GW of additional margin, if Drax was on it would be priced at the margin and if it was not then quite frankly most other operational plant was needed. Due to the size of Drax its importance was exemplified. When the pool system was replaced with Neta the need for large big machines became less and smaller fleet of foot machines were the order of the day. Flexibility would be rewarded.

Langeled could during low Summer demand periods produce as much as 25% of the UK's daily gas demands. It is clearly hugely influential on gas prices and therefore power prices. Not surprisingly the market is still a little jittery when we see Langeled struggle to find its feet, and continue to flex in terms of volume.


Gas  Generation  Interconnector 

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